Constant disruption to the ferry service may be the least of our worries if LNG tankers start traversing Howe Sound. If a tanker explodes, Horseshoe Bay, Bowen Island or parts of the Sea to Sky Highway are obliterated. And if the tanker captain chose Thornborough Channel, Gibsons would be utterly destroyed in case of an explosion. LNG tankers have the explosive power of 70 Hiroshima bombs.
In a presentation called “Is this what we want for Howe Sound?” Dr. Eoin Finn warned of the dangers of LNG tankers plying these waters. About 50 people attended the meeting at the United Church in Gibsons on April 29.
Dr. Finn is a retired partner of KPMG and holds Ph.D. (Physical Chemistry) and MBA (International Business) degrees. In summer, he lives on Bowyer Island in Howe Sound where he grew up. He is a campaigner with My Sea to Sky, a volunteer organization that a group of Squamish citizens set up in March 2014 in response to growing concerns about the proposed Woodfibre LNG project.
Woodfibre LNG is a subsidiary of Pacific Gas and Oil. Both are part of a conglomerate of companies held by Sukanto Tanoto, one of the wealthiest men in Indonesia. With a slide, Finn pointed to Tanoto’s business reputation: tax evasion, human rights violations, animal rights violations, widespread peatland destruction in Sumatran tiger habitat, an abysmal environmental record, and bank fraud.
“And his companies have never built a new LNG plant,” Finn said. “They may buy existing ones, but they have no experience with building a new one, like in Howe Sound.”
Woodfibre LNG intends to permanently store about 180,000 tonnes of liquefied gas in two older, decommissioned, unregistered LNG tankers bolted together, just in front of the terminal. In the rest of the world, storage is kept at a good distance from the liquefaction operation for safety reasons, Finn said.
Tankers holding between 50,000 and 60,000 tonnes of LNG would go through Howe Sound. In case of a rupture, liquefied natural gas does not evaporate. It mixes with air and forms a low hanging white cloud that blows wherever the wind goes, suffocating life beneath it. Natural gas liquefies at -162 C. At -152 C, it can ignite. Any fire, from a cigarette, a barbecue or an engine, will instantly cause a massive fireball that would incinerate everything in its path.
International rules say the danger zone around LNG tankers is 3,500 to 4,200 metres. Howe Sound is so narrow that its shores are well within the danger zone. Looking at a map, Finn pointed out that Gambier, Keats, Bowen, the Sea to Sky Highway, Lions Bay, Horsehoe Bay and West Vancouver would be at serious risk.
At an open house on Gambier in March, Woodfibre LNG president Anthony Gelotti stated that the tankers could also go through Thornborough Channel, between Port Mellon and Gambier. Woodfibre LNG does not own the tankers, Gelotti said, and the captain could choose whatever route he wanted, including Thornborough Channel.
“If the tanker captain chose that route and the tanker exploded, Gibsons would be gone in an instant,” Finn said.
Canada has no rules for LNG shipping.
Woodfibre LNG has repeatedly reassured audiences that LNG shipping is perfectly safe and that a tanker has never exploded. They are right about the latter, Finn said. “That is because there are international rules for safe tanker traffic. Woodfibres proposal violates at least five of those rules. They point to the world safety record but break the rules that have ensured that safety.” He also pointed out that LNG terminals have exploded in several countries.
International rules also require that LNG terminals not be situated on the outside curve of a waterway. Woodfibre LNG’s proposed plant is exactly on such a curve. Ships going to or coming from the harbour in Squamish would, at some point on their route, inevitably be pointed at the Woodfibre terminal and its bolted-together tankers storing 180,000 tonnes of LNG. If a ship lost power, or steering, and could not stop, there would be a disaster.
Finn said that in case of such a calamity, the insurance would only cover the cost of the tanker itself.
The LNG would be transported in 948 ft. tankers, more than twice the size of the 457-ft. Queen of Surrey. According to Woodfibre, the tankers will make 40 trips a year, traversing Howe Sound on 80 different days. But Finn noted that the company is paying for an infrastructure, notably 24” gas pipes but also compression and power capability, that supports a volume six times larger. At six-fold capacity, LNG tankers would go through Howe Sound every day.
LNG tankers travel at 8–12 knots per hour. For technical reasons, they cannot go slower than 8 knots. The prospect of 948-ft. tankers traversing Howe Sound has Finn very concerned. From the bridge at the back of the vessel, the captain cannot see what is happening for a mile ahead. Even with tug boats, a vessel that size is hard to stop. “Suppose you’re in the way and your boat loses power, or you’re in a sail boat and there is no wind. Or you’re in a kayak,” he said.
International rules require that LNG terminals not be situated on inland waterways with recreational vessels. International rules also require no vessels on the tankers’ route for twenty minutes before and twenty minutes after its passing. In Howe Sound, that would mean that marine traffic would be disrupted for two hours whenever a tanker plies its way from the Salish Sea to the terminal, or vice versa. “There is no way you can clear the route of all boat traffic in Howe Sound,” Finn said.
The tankers intersect with three ferry routes. “All BC Ferries has said is that it is Woodfibres problem, not theirs,” Finn said, shaking his head. ‘And we are now only talking about 80 days a year. Imagine what it will do to the ferry schedules if tankers go through every day.”
The size of the bow and stern waves generated by the tankers is unknown. Shoreline waves may affect children playing on beaches, floats and moorages, and may cause beach erosion, Finn said.
Bunkering fuel for the tankers’ voyages to China is another issue. After the recent spill in English Bay, Woodfibre LNG vice-president Byng Giraud was quick with reassurances that LNG tankers run on LNG, not bunker fuel.
“I called him on that,” Finn said. “I pointed out that no tanker in the world has engines that run purely on LNG. He now admits that.”
An LNG tanker going to China needs about 3,500 tonnes of bunker fuel, Finn said. The bunkering would take place in English Bay. Finn painted a picture of two ships side by side, bobbing on the water. “Bunkering out on the water is quite complicated and risky. For safety reasons, it should only be done with a wind of less than 15 knots. But it costs $100,000 a day to lease a tanker, so they will try not to wait too long.”
The company has announced the plant will run on electricity, not on gas, to save the environment. However, Finn showed on a chart that every year, the plant would still emit as much carbon dioxide as 137,000 vehicles, as much smog as 27,000 vehicles, as much sulphur dioxide as 170,000 vehicles, as many fine particles as 70,000 vehicles, plus an unknown quantity of mercury.
In addition to emissions at the plant, natural gas is not a clean resource from the outset, Finn said. “About half of the gas we use comes from fracking in northeast B.C. Each of these wells requires 10 million gallons of water per year. It is mixed with unknown chemicals—we do know these include mercury and arsenic— and we don’t really know where the waste water goes afterwards. Unfortunately, the amount of gas produced by fracking is increasing.”
Natural gas needs to be cooled to a temperature of —162 C to liquefy. The Woodfibre plant would need to pump 17,000 cubic tonnes of water per hour out of Howe Sound for the cooling process. The same water, chlorinated and treated, would go back into Howe Sound 10 C warmer than the surrounding water. Water cooling of LNG has been banned in California, New York State and Europe because of its negative effects on the environment.
“And this at a time when orcas, herring and salmon have just returned to Howe Sound,” Finn said. “Last year, we even saw a humpback whale.”
Finn pointed to another hazard of the proposed Woodfibre plant: earthquakes. Two fault lines run underneath the plant, and several are right next to the gas pipeline to the facility. Earthquake alley, the First Nations call the area.
Finn also noted the terrorism risk of LNG tankers. For two years after 9/11, the Port Authority in Boston did not allow LNG tankers near the city out of fear they could be terrorist targets. Now, when the tankers come in, they have to be accompanied by boats with heavily armed guards. There are no such precautions required in Canada.
“There is a lack of understanding with our public officials about how dangerous these things are. This proposal (for the Woodfibre LNG plant) would be an absolute no-go in the United States or Europe,” Finn said.
Finn discussed the poor economics behind the proposal at length. He said he first heard about the plans for an LNG plant near Squamish in November 2013, when premier Christy Clark touted it as a great opportunity for B.C. that would create 75,000 long-term jobs, with British Columbians first in line for these jobs. And it would pay off the $69 billion provincial debt.
Both the B.C. Liberal government and the federal Conservatives are in favour of LNG exports from B.C. After the nuclear disaster in Fukushima in 2011, Japan shut down a number of its reactors, requiring more natural gas. The demand for LNG, and the price, went up.
Not long after, the National Energy Board approved nine LNG export projects in B.C. Six more are in the pipeline. Some of the projects have a volume of 30 megatonnes a year. With 2.4 million, Woodfibre LNG is the second-smallest project. But it is the first one planned to start operations, in March 2017.
At the time, the fifteen projects together were touted as being able to satisfy the entire world demand for natural gas, Finn said. “It was a pretty ambitious plan.”
“But in all my years as partner with KPMG, I have never seen such a bad business case,” he said. “Japan has started nuclear reactors up again, there is more conservation of power in Asia, more local Asian reserves are developed, there are more spot deals on the world market, and China and Russia have two 30-year pipeline deals in place. The United States imported gas in the past, but use that infrastructure now to export shale gas. And the Australians were ahead of us with LNG exports. There is no chance that B.C. will be a world LNG supplier.”
To be profitable, the price per BTU must be at least $11. Right now, the world price is only $6.75. On the surface, it would seem that there is only a small chance the Woodfibre LNG plant would be built. Not so, Finn said.
“Tanoto and Pacific Oil and Gas did not invest their own money. It is borrowed, and the B.C. government has all kinds of tax incentives and other accommodations for the gas to be exported.
“It is not a good business deal—I don’t know if the B.C. government realizes that or not—but the Liberals have said they will have the LNG export industry going before the next election, and that is exactly what they are going to do. Pacific Gas and Oil does not care. If gas prices go up, they benefit, if not, they go bankrupt and don’t lose anything.”
B.C. will not see a penny in royalties from these exports, Finn said. The companies are only charged over the profits they make. “But Tanoto and Pacific Oil and Gas have structured their business in such a way that Woodfibre LNG on Howe Sound will never show a profit. The money goes offshore. “Meanwhile, the B.C. government just passed second reading on a bill to keep royalty agreements secret.”
The B.C. government is giving the gas away for free with all kinds of financial accommodations and paying these companies to ship it to China, that’s what it comes down to, Finn said. “This is the worst business case I’ve ever seen—until the government started to facilitate it" said Finn. “Natural gas is owned by you and me. To give it away to people who don’t live here, is plain wrong.”
We should follow Norway’s example, he said. It taxes its oil and gas when it comes out of the ground, at world prices. And yet the companies keep doing business. Norway now has a $1 trillion fund for future generations.
Finn is not optimistic about the future of Howe Sound. He has offered to give a presentation about Woodfibre LNG’s proposal to the caucuses of the NDP, the Liberal and the Green parties in Victoria, but has not received any response.
He suggested that Sunshine Coasters who are concerned about the proposed Woodfibre LNG plant join organizations like My Sea to Sky and contact their MLA (Nicholas Simons) and their MP (John Weston).